Process Industry Project Economics

- An implementation in FeNi Smelter Project -

- A three day hands-on Excel based course -

Course outline
The process industries can be broadly viewed as transforming fuel, mineral, and agricultural commodities through a
network of physical and chemical processing into finished products. The characteristics of the process industry project
with high uncertain in commodity price. The feed stock and product output are rely on market uncertainty.
Current market turbulence has increased the need to understand the interrelationship between technical and financial
risk. The key consideration is the intrinsic value of a smelter project. Many people in the smelter industry are concerned
that their organizations may be destroying value by making systematic errors in investment evaluation and decision.
Understanding how this impact on the valuation of projects also permits an objective approach to determining levels of
uncertainty. Therefore, it is very important to identify the uncertain variables and explore ways to minimize the
downside risk and to maximize the upside potential. The advance analysis using probabilistic model and Real Options
method is essential to understand the influences and dynamics of project economics with respect to the process
industry becoming imperative for anyone undertaking the new project investment.
This specially online three day course aims to provide a solid understanding how to evaluate of smelter projects and to
improve the project risk evaluation using probabilistic model and modern valuation method.

Course objective The Development of Valuation Techniques

This course will :
• Learn the basic of evaluation techniques as well as the
practical the implementation of these techniques to
process industry projects especially for smelter project
• Enable participants to identify and quantifying risk using
probabilistic Monte Carlo Simulation
• Bring participants up to date on recent development in
project modeling and evaluation using advance
valuation techniques.

Key Benefit
At the end of the course participants will:
• Have acquired the knowledge of best practice of
investment strategy in process industry project
• Have acquired the skills to identify, model and evaluate a
project using deterministic and probabilistic approach
Who should attend this course
This three day -online course is designed for professional
or investor who wants to learn investment evaluation in
process industry project and to improve their skills in
evaluating techniques including risk quantification.
Delivery Format
This course is conducted as 3 x 2-hour online sessions on
three consecutive days . At the end of each topic, a 10
minute question-answer session is held where the
instructor gives individual assistance.
During the course live, instructor will show how to apply
each topic by simulating in excel. Participants will follow
this simulation by comparing with the final result.
Course facilitator
NUZULUL HAQ
Education:
• S1: Mining Metallurgy - ITB (1996)
• S2: Financial Management – UI (2002)
Work Experience:
• Metallurgist in Newmont Mesel (1997-1999)
• Process Engineer in Newcrest Gosowong (1999-2000)
• Planning and Economics – Medco Energi (2002-2017)
• Independent Consultant ( 2018 – present)
▪ Founder of Decisive Value Consulting that specialize in
advance project economics using modern valuation
techniques for improved investment decision.
▪ Author for several books related to Modeling valuation
risk decision in resource-based industry

Email: info@explorerealoptions.id
 Process Industry Project Economics
- An implementation in FeNi Smelter Project -
Moving from the deterministic static approach to probabilistic dynamic approach framework
for improved investment decision making in smelter projects
Course Outline Day 1 – Basic Project economcs
1. INTRODUCTION
• Introductions and Objectives
• Overview of process industry project
• Metallurgical process of FeNi Smelter
• Material balance of FeNi smelter
2. FUNDAMENTAL OF PROJECT ECONOMICS
• Concept of Project Investment Analysis
• Cost structure of process industry projects
• Capex and cost breakdown in smelter project
• Key metrics of valuation (NPV, IRR, Payback)
3. KEY CONCEPT OF FINANCIAL MODELING
• Key accounting concept
• Issues and guidance in financial modeling
• Modelling best practice
• Boosting productivity modeling
4. BUILDING INTEGRATED FINANCIAL MODEL
• Modular development
• Dependents and precedents
• Financial Model Structure
• Cell formatting key
• Setting up constant
Course Outline Day 3 – Advance Project Economics
7. DECISION OPTION MODELING
• Real Options Concept
• Decision option to invest now or later
8. MODERN REAL OPTIONS VALUATION
• Bias in conventional DCF approach
• Conventional DCF vs Real Options (RO)
9. THE USE OF MARKET INFORMATION
• Futures market
• Forward Pricing model of Metal Product
Case study: FeNi Smelter Project
Course
CourseOutline
OutlineDay Two
Day 2 – Project Risk Analysis
5. PROJECT RISK ANALYSIS
• Overview of risk analysis in smelter project
• Risk vs Uncertainty
• Three Stage of Risk Quantification:
1. Scenario Analysis (base, high, and low case)
2. Sensitivity Analysis (spider diagram, data table)
3. Monte Carlo Simulation (probabilistic of
occurrence, risk vs return)
6. PROBABILISTIC MODELING USING SIPMATH
• Introduction of probabilistic modeling
• Type of probability distribution (normal, log-
normal, and triangular)
• Key features of SIPMath Software
• Steps to run simulation using SIPMath
• Schematic process of Monte Carlo simulation
• Quantifying variable uncertainty in smelter project
using simulations techniques
• Assessing the effect of variable uncertainty on
project’s NPV
• Step by step how to use SIPmath software
Course material
1. Extensive course notes and excel spreadsheets
2. Free SIPmath Monte Carlo simulation software
3. Free book “ modelling valuation decision risk
in process industry project “ by Nuzulul Haq
Email: info@explorerealoptions.id